LONDON, Aug 7 (Reuters) - World shares edged toward a six-month high on Tuesday, as the biggest jump in Chinese stocks for over two years and a sharp rally in Europe’s oil and mining firms set Wall Street up for more gains.

The moves had U.S. S&P 500, Dow and Nasdaq futures pointing as much as 0.4 percent higher and came despite a host of simmering global feuds.

Oil prices ticked up as the United States reimposed some sanctions on Iran, while the Turkish lira was trying to bounce back from its worst day in a decade on Monday that had been prompted by a row with Washington.

The mood lifted overnight as Chinese stocks rebounded 2.7 percent on hopes of fresh government spending, following a four-day selloff that had knocked them down about 6 percent.

London, Paris and Frankfurt then rose 0.8 to 0.9 percent as Europe’s investors cheered both the move up in commodity stocks and results from Italy’s biggest bank UniCredit

“The Chinese have stabilised the yuan, the lira hasn’t been annihilated this morning so once the sharp FX moves have calmed down and as long as the (company) earnings are good, you have a more risk friendly environment,” said Societe Generale strategist Kit Juckes.

Currency markets remained volatile although less so than in recent sessions as the dollar dipped.

The euro bounced to $1.16 from a near six-week low despite a second day of disappointing German economic data, while Britain’s pound made back some ground after Brexit worries had pushed it to an 11-month low.

Turkey’s lira recovered as much as two percent from Monday’s losses of more than five percent after Washington had moved to end duty-free access to U.S. markets for some Turkish exports. A report by CNN Turk that Turkish officials would go to Washington to discuss the strained relations helped the rise, although it was starting to retrace again as U.S. trading began.

Already struggling with inflation at 14-year highs near 16 percent and political pressure on the central bank not to raise interest rates, the lira’s year-to-date losses are nearing 30 percent as jitters about foreign currency debt payments rise.

“Currently the impact of the lira’s slide is mostly contained within the country. But fears of a default will begin to increase if the currency keeps depreciating,” said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities. “Such a development could affect some European financial institutions,” he added.

WALL STREET WHOOSH

An impressive global earnings picture and upgrades to the U.S. profit growth horizon continued to outweigh the global trade tensions and the various emerging market dislocations.

Wall Street’s S&P 500 will start at its highest level since Jan. 29 and less than one percent from its record high hit earlier that month.

The VIX volatility gauge is now at its lowest since late January too, while a surge in U.S. corporate earnings driven by tax cuts - they achieved an annual aggregate growth rate of about 25 percent in the second quarter - has prompted the likes of Citi to upgrade their end-2018 and 2019 earnings forecasts.

That renewed traction has buoyed market sentiment around the world, with Tokyo and Seoul both up 0.6 percent and Hong Kong closing up more than 1.5 percent along with Shanghai’s big bounce.

In commodities, oil extended the previous day’s rally after the imposition of U.S. sanctions against major crude exporter Iran took effect on Tuesday.

Benchmark Brent crude oil futures shook off earlier weakness and were 1.5 percent higher at $74.80 a barrel. They had gained 0.75 percent on Monday after OPEC sources also said Saudi production had unexpectedly fallen in July.

On bond markets, borrowing costs for euro zone benchmark issuer Germany were edging off their lowest levels in almost two weeks as sidelined concerns about global trade and turbulence in Italy eased demand for the least risky assets.

The softer dollar helped metals. Copper was up 0.5 percent at $6,161.50 a tonne after retreating more than 1 percent the previous day. Gold, which is stuck near a one-year low, crawled 0.2 percent higher to $1,208.06 an ounce

Additional reporting by Helen Reid in London; editing by
Richard Balmforth, William Maclean